What is the balance on the mortgage?
We have a first mortgage for $480,000 and a second for $77,000.
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If you file a Bankruptcy, your wages cannot be garnished to pay the debts that are discharged in the Bankrutpcy.
Credit counseling is not usually better than a Bankruptcy - even if you can find a reputable credit counseling program - as with a Bankruptcy all unsecured debts are discharged. With credit counseling, there is often at least one creditor who will not participate, which means the debt to that creditor(s) will still be owed at the end of the credit counseling program.
Is there a requirement to go through some sort of credit counseling program before I can file bankruptcy? And if I do go that route, do I need to find a bankruptcy attorney to do this? One more question, I promise: Which would be more damaging to me, to file bankruptcy or to foreclose on my house (and once I did that, I would have the means to pay all my other debt)?
Thanks for your help.
Yes - Credit Counseling Course that you must take before filing a Bankruptcy. The course takes about one hour to complete, can be taken online, and costs $50 or less.
Although not necessary, it is highly recommended that you use a Bankruptcy attorney, as filing a Bankruptcy is very complicated, and required completion of a 60-page petition. A good way to find a Bankruptcy attorney who knows what he is doing is to call the Tennessee Bar Association to ask for a recommendation. The number is 800-899-6993.
Both a foreclosure and a Bankruptcy have a similar negative affect on one's credit report. However, a Bankrutpcy remains on the credit report for up to 10 years, and a foreclosure remains for up to 7 years.
The problem with a foreclosure is if the mortgage company sells the house for less than the balance on the mortgage, they can get a deficiency judgment for the difference. This judgment could be used to garnish wages, unless you do file a Bankruptcy - which you can do after the house forecloses. (So it is possible to have a foreclosure and a Bankruptcy.)
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